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The last mile, in the context of freight and logistics, refers to the final leg of the delivery process, in which goods are transported from a distribution center or hub to the end consumer’s doorstep. It has quickly gained the reputation for being the most challenging part of the logistics chain.
Long gone are the days when last-mile service was easy. Until about 10 years ago, there were only a few options, mainly five-day deliveries by parcel providers, and the only option was to order something online and send it to the home. Last-mile delivery was originally only used by online retailers, but now every retailer ships to the consumer and pretty much every manufacturer has become a retailer.
Over the last few years, we have seen multiple methods of delivering products to the end consumer. Besides the large parcel providers, we now have regional and local providers and multiple hybrid and on-demand service methods.
But we also have a variety of fulfillment options, including buy online, pickup in store (BOPIS); buy online, pick up at curbside (BOPAC); and buy in store and deliver at home. I won’t even get into the topic of locker deliveries.
Combined with an ever-increasing volume in e-commerce, this has led to last-mile service becoming one of the most complex and most expensive parts of the supply chain. And then there are other impacts like looming strikes of warehouse workers or delivery drivers.
Other factors have added to the complexity of last-mile operations. First, we notice the complexity of densely populated urban areas with intricate road networks, traffic congestion and limited parking. Next, there are ever increasing customer expectations as consumers have come to expect fast and flexible delivery options, including same-day or next-day delivery as well as free returns. Next comes the cost pressure of last-mile deliveries, which are further impacted by frequent returns and failed deliveries. Then there are the environmental concerns as consumers are becoming more alarmed by pollution caused in the last mile and they expect their vendors to come up with more sustainable delivery solutions while at the same time not increasing the cost to that consumer.
Technology in last mile has come to the rescue and can offer solutions to help shippers handle increasing volumes while reducing cost and improving the customer experience. This last part is critical as retailers see revenues increase or decrease based on customer satisfaction and net promoter scores. Consumers are also benefiting from these technologies as they get a better shopper experience, improved visibility into execution and in some cases even into sustainability.
Retailers have long used solutions like route optimization and basic real-time tracking to provide better customer experiences. In more recent years, we have seen platforms appear focused on pre- and post-purchase customer experience and last-mile visibility like project44, last-mile delivery optimization like Shipium and on-demand last-mile services platforms like Frayt. Add automated delivery vehicles and robots and other last-mile technology solutions to that list, which all can help retailers provide services to compete with the likes of Amazon.
Due to the last-mile complexity and challenges, companies are continuously exploring innovative solutions to streamline last-mile deliveries. These solutions include using more regional, local and on-demand delivery operators, alternative delivery methods like drones and autonomous vehicles, setting up local pickup points or lockers and using advanced route optimization algorithms.
Technology alone though will not solve all this complexity. The unique and varied nature of last-mile deliveries means that addressing these challenges effectively requires a combination of technology, logistics expertise (talent), a willingness to try new ways of operating, as well as a deep understanding of local conditions.
Look for more articles from me every Friday on freightwaves.com.
About the author
Bart De Muynck is an industry thought leader with over 30 years of supply chain and logistics experience. He has worked for major international companies, including EY, GE Capital, Penske Logistics and PepsiCo, as well as several tech companies. He also spent eight years as a vice president of research at Gartner and, most recently, served as chief industry officer at project44. He is a member of the Forbes Technology Council and CSCMP’s Executive Inner Circle.